HOUSTON (CN) - In a remarkable display of chutzpah, BP sued the U.S. Environmental Protection Agency, claiming the EPA illegally barred the oil giant from new government contracts.
In its federal lawsuit, lead plaintiff BP Exploration & Production Co. claims the EPA suspension violated the Administrative Procedures Act.
The EPA suspension applies only to new contracts. Existing contracts are still in effect.
"BP brings this action challenging EPA's November 28, 2012 and January 4, 2013 suspensions of plaintiffs from participating in any new federal procurement contracts and nonprocurement covered transactions, and EPA's separate February 1, 2013 disqualification of BP Exploration & Production Company Inc. ('BPXP') under the Clean Water Act from receiving any new federal contracts or other benefits. EPA issued its written Memorandum of Decision continuing the suspensions and disqualification of July 19, 2013," the 38-page lawsuit states.
"With the exception of BP plc, BP has a long-standing business relationship with the federal government. As one of the country's largest corporate employers and investors, BP is the leading producer of deepwater oil and gas in the Gulf of Mexico under federal drilling leases, and is one of the government's largest fuel suppliers here and abroad.
"For more than two and a half years after the Deepwater Horizon accident on April 20, 2010, the federal government continued to purchase fuel under contracts with BP, and as required by law, repeatedly determined that BP was a responsible government contractor before each award. Similarly, BP's principal federal regulators publicly expressed their confidence in BP as a safe and responsible operator, allowing it to bid on and win dozens of lease blocks in the Gulf of Mexico and issuing drilling licenses and permits. In order to maintain its eligibility to continue participating in federal contracts and transactions, BP initiated discussions with EPA in July 2012 for the purpose of resolving any potential federal suspension and debarment issues as a result of the Deepwater Horizon incident.
"EPA and BP spent months negotiating the substance and terms of an Administrative Agreement to resolve any such issues when, in the midst of these negotiations, EPA suspended BP on November 28, 2012 and January 4, 2013, without any prior notice. EPA's suspension includes 21 different BP entities, nearly all of which had no involvement in the accident or its aftermath. EPA's decision to suspend did not address the overwhelming evidence and record of BP's present responsibility as a government contractor and leaseholder, and did not attempt to explain how or why immediate suspension was necessary to protect the public interest, as federal law requires. No such explanation is possible given that (a) the government continued to contract with BP, award it new leases, and determine that BP is a responsible contractor long after the Deepwater Horizon incident; (b) the events and conduct alleged by EPA to be the basis for suspension had been known to that agency for months or even years; and (c) the government properly continues to do business with BP under existing contracts and leases awarded prior to the suspension.
"EPA compounded its errors on February 1, 2013, when it disqualified plaintiff BPXP from all federal contracts and benefits based on BPXP's one-count misdemeanor conviction for violating the Clean Water Act. In so doing, EPA designated BPXP's corporate headquarters in Houston as the place where the Clean Water Act violation giving rise to BPXP's error occurred. But there was no Clean Water Act violation at BPXP's headquarters and BPXP has never been convicted of such a violation. Instead, BPXP pleaded guilty to, and was convicted of, negligently discharging oil into the Gulf of Mexico when the Macondo Well blew out on April 20, 2010. Simply stated, BPXP's Clean Water violation did not occur in Houston; it occurred more than 440 miles away in the Gulf of Mexico."
Twenty-three BP entities are listed as plaintiffs.
They claim that "EPA's suspension of the BP plaintiffs and separate disqualification of BPXP are contrary to federal law and regulations; exceed EPA's statutory and regulatory authority and limitations; are unsupported and contradicted by the record in the matter; and are punitive, arbitrary, capricious, and an abuse of EPA's discretion, all of which violate the Administrative Procedure Act."
The oil giant says that "through its various operating entities, BP is one of the largest fuel suppliers to the government. BP holds contracts with the United States worth more than $1.34 billion, under which the company provides jet fuel, marine diesel fuel, aviation gasoline, commercial airport refueling services, bulk fuel storage, lubricants, and natural gas."
Also, according to the complaint, "through BPXP, BP holds the most federal deepwater lease acreage in the Gulf of Mexico and is one of the industry's leading producers of oil and gas from this area."
The EPA suspension came after the April 20, 2010 Deepwater Horizon explosion, which killed 11 people and set off the worst oil spill in U.S. history. An estimated 4.9 million barrels of oil were spilled during the next three months.
"The federal government awarded 23 fuel contracts to BP following the Deepwater Horizon accident," the company says. "... The government has thus repeatedly concluded over the past three years that BP is responsible and, indeed, continues to purchase fuel from BP under the parties' existing contracts."
In 2011 BP was awarded 11 U.S. deepwater blocks in the Gulf of Mexico, and it got 43 leases in the Gulf in 2012 - the second-highest number of blocks among all bidders, according to the complaint.
BPXP pleaded guilty to 11 counts of criminal violations in November 2012, under a plea agreement, and agreed to pay $4 billion in fines.
"Under federal law and regulations, suspension from participation in government contracting and transactions is a 'serious action that EPA may take only to protect the public interest.' 2 C.F.R. §§ 180.1259(c), 180.700. For this reason, EPA's authority to suspend is limited to situations where 'immediate action is necessary to protect the public interest.' Id. § 180.700," the lawsuit states.
Neither the EPA nor the Department of Justice responded to requests for comment.
BP seeks a declaration that the EPA's continued suspension exceeds the EPA's power, is punitive, arbitrary, capricious and an abuse of discretion.
BP is represented Thomas W. Taylor with Andrews Kurth in Houston.
The lawsuit appears to be part of a public relations offensive from BP. The company bought a full-page ad in the Tuesday edition of The New York Times, claiming it is being forced to pay claims to businesses that did not suffer from the Deepwater Horizon oil spill.